MercoPress. South Atlantic News Agency

Uruguay cancels debt and stand by program with IMF

Uruguay announced its intention to repay early all outstanding obligations to the International Monetary Fund (IMF), amounting to an estimated 1.080 billion US dollars. Finance minister Danilo Astori also announced the canceling the current Stand-By Arrangement which extended until 2008.

Finance minister Danilo Astori also announced the canceling the current Stand-By Arrangement which extended until 2008.

Mr. Rodrigo de Rato, the Managing Director of the IMF, said, "I welcome Uruguay's decision to repay its outstanding obligations to the Fund. This decision reflects the quick recovery of Uruguay from crisis, supported by the international community and the Fund, and its renewed access to international capital markets. The track record of sound macroeconomic policy management has provided the basis for the consolidation of market confidence, strong economic outcomes, and an improved profile of public debt".

"We look forward to continuing a close and constructive relationship with Uruguay as the authorities continue to pursue their important reform agenda," Mr. de Rato added.

Total drawings by Uruguay under its two Stand-By Arrangements were equivalent to SDR 2.25 billion, about 3.35 billion US dollars. Uruguay made three early repayments between September 2005 and August 2006 amounting to SDR 1.14 billion equivalent to 1.69 billion US dollars.

Under the original schedule, the final repayment of outstanding loans from the IMF would have taken place in 2010

Astori described relations with the IMF as very friendly but from now on "we'll be exchanging ideas and suggestions". He said that canceling the IMF debt will represent a significant drop in the gross sovereign debt of Uruguay "enabling us to continue with the process of reducing the debt/GDP equation".

Following IMF repayment Uruguay's foreign debt is estimated to be in the range of 13 billion US dollars.

According to the IMF/Uruguay stand by program for 2005/2008 the debt GDP ratio is forecasted to drop from 70% to 54%, after having reached a staggering 87 and 98% in the peak of the 2001/02 financial crisis consequences and run on the banks.